Day: January 28, 2024

© Reuters. FILE PHOTO: U.S. President Joe Biden delivers a prime-time address to the nation about his approaches to the conflict between Israel and Hamas, humanitarian assistance in Gaza and continued support for Ukraine in their war with Russia, from the Oval Offi

WASHINGTON (Reuters) – Three U.S. service members were killed and as many as 34 wounded, United States officials said on Sunday, after a drone attack in Jordan that they linked to Iranian-backed militants.

The attack is a major escalation of the tensions in the Middle East sparked by Hamas’ attack in Israel on Oct. 7 and Israel’s retaliatory strikes that have devastated Gaza.

Here are reactions from key policy makers in the United States:

DEMOCRATIC U.S. PRESIDENT JOE BIDEN

“The three American service members we lost were patriots in the highest sense. And their ultimate sacrifice will never be forgotten by our nation … We will carry on their commitment to fight terrorism. And have no doubt – we will hold all those responsible to account at a time and in a manner our choosing.”

REPUBLICAN FORMER PRESIDENT DONALD TRUMP

“The drone attack on a U.S. Military Installation in Jordan, killing 3 American service members, and wounding many more, marks a horrible day for America … This brazen attack on the United States is yet another horrific and tragic consequence of Joe Biden’s weakness and surrender.”

LLOYD AUSTIN, U.S. DEFENSE SECRETARY

“Iran-backed militias are responsible for these continued attacks on U.S. forces, and we will respond at a time and place of our choosing.”

MICHAEL MCCAUL, REPUBLICAN U.S. HOUSE FOREIGN AFFAIRS PANEL CHAIR

“We need a major reset of our Middle East policy to protect our national security interests and restore deterrence.”

MITCH MCCONNELL, SENATE REPUBLICAN LEADER

“Last night, the cost of failure to deter America’s adversaries was again measured in American lives. We cannot afford to keep responding to this violent aggression with hesitation and half-measures … The entire world now watches for signs that the President is finally prepared to exercise American strength to compel Iran to change its behavior. Our enemies are emboldened.”

REPRESENTATIVE HAKEEM JEFFRIES, DEMOCRATIC HOUSE MINORITY LEADER

“Every single malignant actor responsible must be held accountable.”

ROGER WICKER, REPUBLICAN U.S. SENATOR FOR MISSISSIPPI

“We must respond to these repeated attacks by Iran and its proxies by striking directly against Iranian targets and its leadership. The Biden administration’s responses thus far have only invited more attacks.” TOM COTTON, REPUBLICAN U.S. SENATOR FROM ARKANSAS

“The only answer to these attacks must be devastating military retaliation against Iran’s terrorist forces, both in Iran and across the Middle East.”

JACKY ROSEN, DEMOCRATIC U.S. SENATOR FROM NEVADA

“Iran must be held accountable.”

RICK SCOTT, REPUBLICAN U.S. SENATOR FROM FLORIDA

“Iran is blatantly questioning U.S. strength & resolve thanks to @JoeBiden’s appeasement of the world’s largest sponsor of terrorism. It must end.”

DAN SULLIVAN, REPUBLICAN U.S. SENATOR FROM ALASKA

“Iranian terrorist proxies have crossed a red line with the reported killing of 3 brave U.S. service members and wounding of dozens more.”

4/4
© Reuters. French farmers use their tractors during a go-slow operation near Roissy Charles-de-Gaulle airport as they protest over price pressures, taxes and green regulation, grievances shared by farmers across Europe, in Compans, near Paris, France, January 27, 20
2/4

By Benjamin Mallet and Sudip Kar-Gupta

PARIS (Reuters) -France stepped up security measures on Sunday as farmers prepared to converge on Paris as part of nationwide protests from agricultural workers demanding better pay and living conditions.

Farmers in France, the European Union’s biggest agricultural producer, have complained of unfair competition from rivals in more lightly regulated countries. Over the last week, they have set up roadblocks on motorways to highlight their cause. They have also damaged property, including local government offices.

Some farmers’ unions called for protesters to set up transport roadblocks around the capital on Monday, and to target the Rungis food market near Paris.

“Our aim is to encircle Paris,” farmer Daniel Faucheux told BFM TV, as he prepared to travel to the capital in a convoy of farmers’ vehicles and tractors.

The Paris police body said that, in response to this, it was increasing security around Rungis and the Paris Roissy airport. It also published videos on its social media account of armoured police vehicles taking up position by Rungis.

Interior Minister Gerald Darmanin said those measures were to ensure no tractor could get into Paris, but he nevertheless warned of disruption on Monday in the Ile-de-France region, which covers Paris and the nearby suburbs. He added that around 15,000 police would be used as part of the security operation.

“Transport will be very difficult tomorrow in Ile-de-France,” said Darmanin.

“We are losing a bit of our economic growth as a result of these roadblocks,” he added.

The French protests follow similar action in other European countries, including Germany and Poland, ahead of European elections in June in which the far right – for whom farmers represent a growing constituency – are predicted to make gains.

French far-right leader Marine Le Pen – President Emmanuel Macron’s closest opponent in the 2017 and 2022 elections – visited some of those demonstrating in northern France.

“We have got to get our farming out of these free trade agreements,” she said.

On Friday, the government dropped plans to gradually reduce state subsidies on agricultural diesel, and announced other steps to reduce the financial and administrative pressures farmers face. Nevertheless, many farmers want more.

© Reuters. FILE PHOTO: The logo of Airbus is seen at the Milipol Paris, the worldwide exhibition dedicated to homeland security and safety, in Villepinte near Paris, France, November 15, 2023. REUTERS/Sarah Meyssonnier/File Photo

By Tim Hepher and Rajesh Kumar Singh

DUBLIN/CHICAGO (Reuters) -United Airlines has approached Airbus about buying more A321neo jets to fill a potential void left by the delayed Boeing (NYSE:BA) 737 MAX 10, in a trade-off likely to ease deadlock over a long-delayed separate order for larger jets, industry sources said.

United CEO Scott Kirby (NYSE:KEX) flew to Toulouse recently to sound out the planemaker on a potential quid-quo-pro deal after a mid-air emergency on an Alaska Airlines 737 MAX 9 raised new doubts over certification of the already delayed MAX 10, they said.

“United Airlines has been in talks with Airbus about possible alternatives to the MAX 10 order. To my knowledge no agreement has been reached,” a person familiar with the discussions said.

Talks are at an early stage and there is no guarantee of a deal, the sources said.

Airbus and United Airlines declined to comment.

Kirby’s previously unreported trip to Toulouse is the latest twist in a widening crisis engulfing Boeing as the planemaker seeks to reassure the public and regulators about production quality and safety while preventing key orders unravelling.

Kirby last week called the MAX 9’s partial grounding “the straw that broke the camels back” following certification delays to the MAX 10, the largest member of a jet family tarnished by an earlier safety crisis caused by two fatal crashes.

United has not cancelled any of the 277 MAX 10 jets it has on order, but it has removed them from internal plans, Kirby told reporters last week, leaving questions over how it would fill the gap at a time when rival Airbus is heavily sold out.

Bloomberg News on Friday reported that Airbus was seeking to buy back A321neo positions from the jet market in order to be able to construct a proposal should there be an opening.

Trade publication Air Insight reported Airbus and United were in talks.

Any deal between United and Airbus would depend on scarce availability of the A321neo, which is the most in-demand jet in its category, and the status of United’s contract with Boeing, which is expected to be the subject of intense discussions.

Kirby said last week United had not cancelled MAX 10s, but added: “Boeing is not going to be able to meet their contractual deliveries on at least many of those airplanes and let’s leave it at that.”

Signs of a potential Airbus deal have raised “concern” at Boeing, a senior industry source said.

But the planemaker is unable for now to give the clarity that United and others want over the MAX 10 because of doubts over the certification timeline.

Boeing, which has pledged to tackle quality problems that may have caused a door plug to blow off a MAX 9 and led to the partial grounding, declined to comment on commercial discussions.

Boeing Commercial Airplanes CEO Stan Deal said in a letter to staff on Friday it was “deeply sorry for the significant disruption and frustration for our customers”.

United resumed MAX 9 flights on Saturday.

A350 DELIVERIES

The talks come as Airbus has firm control of the busiest part of the jet market where its 240-seat A321neo has a strong lead over the upcoming MAX 10.

By contrast, it has failed to deliver a single one of its larger A350 jets to United after winning a sale as far back as 2010, after a subsequent merger between United and longstanding Boeing customer Continental Airlines triggered a review.

The orders have been progressively delayed to around 2030.

Industry sources said both sides provisionally agree any deal for A321neo jets would revisit the 45 A350s United has on order and at least include a firmer timeline for deliveries after several deferrals by the Chicago-based airline.

United’s Chief Financial Officer Michael Leskinen said last week it was looking to start taking the deliveries of A350s in the early part of the next decade to replace old Boeing 777s.

United has long been a crucial battleground as Airbus challenged Boeing for a piece of its domestic market and ultimately overtook it as the world’s largest manufacturer.

In 1992, Airbus snatched an order for A320s that broke United’s reliance on Boeing, with which United shares corporate roots.

The unexpected deal triggered a rethink that contributed to the launch of the MAX’s predecessor, the best-selling 737NG.

Now, United’s urgent need for planes is shaping up as a milestone in the problems facing its successor, the MAX.

The latest MAX crisis and wider questions over the state of the plane market duopoly are expected to dominate an annual meeting of aviation financiers in Dublin starting on Monday.

© Reuters. U.S. President Joe Biden delivers remarks at South Carolina’s First in the Nation Dinner at the State Fairgrounds in Columbia, South Carolina, U.S., January 27, 2024. REUTERS/Tom Brenner/File Photo

By Phil Stewart, Steve Holland and Idrees Ali

WASHINGTON (Reuters) -Three U.S. service members were killed and dozens may be wounded after an unmanned aerial drone attack on U.S. forces stationed in northeastern Jordan near the Syrian border, President Joe Biden and U.S. officials said on Sunday.

Biden blamed Iran-backed groups for the attack, the first deadly strike against U.S. forces since the Israel-Hamas war erupted in October and sent shock waves throughout the Middle East.

“While we are still gathering the facts of this attack, we know it was carried out by radical Iran-backed militant groups operating in Syria and Iraq,” Biden said in a statement.

“Have no doubt – we will hold all those responsible to account at a time and in a manner of our choosing,” he said.

U.S. Defense Secretary Lloyd Austin echoed that threat. He and other senior officials briefed Biden earlier in the day on the attack.

At least 34 personnel were evaluated for possible traumatic brain injury, a U.S. official told Reuters, speaking on condition of anonymity. Two different officials said some wounded U.S. forces were medically evacuated from the base for further treatment.

Two U.S. officials said the drone struck near the barracks early in the morning, which could explain the high number of casualties.

The Islamic Resistance in Iraq, an umbrella organization of hardline Iran-backed militant groups, claimed attacks on three bases, including one on the Jordan-Syria border.

The attack is a major escalation of the already tense situation in the Middle East, where war broke out in Gaza after Palestinian Islamist group Hamas’ attack on Israel on Oct. 7 which killed 1,200. Israel’s subsequent assault on Gaza has killed over 26,000 Palestinians, according to the local health ministry.

Since then, U.S. forces have come under attack more than 150 times by Iran-backed groups in Iraq and Syria, causing at least 70 casualties prior to Sunday’s attack, most of them traumatic brain injuries. U.S. warships have also been fired at by Iran-backed Houthi forces in Yemen, who are regularly attacking commercial ships passing through Red Sea waters off Yemen’s coast.

While the United States has thus far maintained an official line that Washington is not at war in the region, it has been retaliating against the Iran-backed groups in Iraq and Syria and carrying out strikes against Yemen’s Houthi military capabilities.

BIDEN PRESSURED ON IRAN

Republican opponents of Biden seized on the attack as evidence of the Democratic president’s failure to confront Iran as its proxies strike against U.S. forces across the region.

“The only answer to these attacks must be devastating military retaliation against Iran’s terrorist forces … Anything less will confirm Joe Biden as a coward,” said Republican Senator Tom Cotton in a statement.

U.S. Senate Republican Leader Mitch McConnell said Biden’s inaction was emboldening enemies of the United States in the Middle East.

“The time to start taking this aggression seriously was long before more brave Americans lost their lives,” McConnell said.

A senior official with the Iran-backed Palestinian militant group Hamas, Sami Abu Zuhri, directly tied the attack to Israel’s campaign in Gaza.

“The killing of three American soldiers is a message to the U.S. administration that unless the killing of innocents in Gaza stops, it must confront the entire nation,” he told Reuters.

“The continued American-Zionist aggression on Gaza is capable of exploding the situation in the region.”

The U.S. military said the attack occurred at a base in northeastern Jordan, near the Syrian border. It did not name the base, but a person familiar with the matter identified it as Tower 22 in Jordan.

U.S. military activity in Jordan can be a sensitive issue, particularly at a time of heightened tensions due to the Israel-Hamas conflict, because of increasing concern in Jordan about the war spreading.

The Jordanian government said only that the attack occurred at an “advanced post” along its border with Syria.

Late last year, Amman asked Washington to deploy Patriot air defense systems to bolster its border defense.

It has requested more aid to tackle drones used in a raging multibillion-dollar drug war along the border with Syria, which Amman blames on pro-Iranian militias who hold sway in southern Syria.

The kingdom has hundreds of U.S. trainers in the country and holds extensive exercises with U.S. troops throughout the year.

© Reuters.

Here is your weekly Pro Recap of the past week’s biggest headlines in the electric vehicle space: Fisker makes a deal; Tesla hits a sales speed bump; and Polestar shrinks.

Get news like this in real time by signing up for InvestingPro.

Fisker’s strategic agreements propel stock surge

Fisker Inc (NYSE:FSR) witnessed a remarkable turnaround on Monday, experiencing a 15% surge in mid-day trading. The rally was ignited by the announcement of a strategic agreement with a 2025 convertible notes investor.

According to an 8-K filing with the SEC, Fisker and the investor mutually agreed to lift all liens on intellectual property upon finalizing an agreement with a strategic OEM partner. This move is expected to pave the way for Fisker to actively seek collaborations and partnerships.

The revised agreement not only eliminates financial covenants related to restricted cash but also marks a significant reduction in outstanding debt associated with the 2025 convertible notes. As of January 19, 2024, Fisker successfully decreased its debt to $324.5 million, a substantial $185.5 million reduction from the initial aggregate issuance amount of $510.0 million. This reduction was achieved through the conversion of a portion of the 2025 notes into equity by the investor.

Fisker’s Chairman and CEO, Henrik Fisker, expressed satisfaction with the outcome, stating, “I am pleased that we were able to reach an agreement with one of our investors that will provide increased flexibility and better position us to execute on potential strategic business deals.”

Additionally, Fisker unveiled plans to sell the remaining inventory of nearly 5,000 vehicles manufactured in 2023 by the end of the first quarter. The company’s new dealer-partner model has attracted interest from over 100 potential dealers in the United States, Canada, and Europe.

Tesla faces stock decline

In stark contrast, Tesla’s (NASDAQ:TSLA) shares plummeted over 10% on Thursday following CEO Elon Musk’s cautionary remarks about a slowdown in sales growth for the year. Musk attributed the anticipated lower growth to the company’s focus on developing a more affordable next-generation electric vehicle, slated for production in the latter half of 2025 at its Texas factory.

The market’s negative reaction could lead to a potential $50 billion reduction in Tesla’s market value if the losses persist. As of Wednesday’s close, the stock had already declined by 16.4% this month.

Compounding Tesla’s challenges, the National Highway Traffic Safety Administration (NHTSA) announced a recall affecting nearly 200,000 electric vehicles due to a software glitch effecting backup cameras.

The recall covers specific 2023 Y, S, and X model vehicles in the U.S. equipped with “Full Self-Driving” computer 4.0 and specific software versions. The glitch may impede drivers’ visibility while driving in reverse, increasing the risk of a crash.

Tesla has resolved the issue through an online software update, reporting no crashes or injuries related to the problem.

However, this development comes less than two months after the company recalled nearly all its vehicles in the U.S. to install new safeguards in its Autopilot system.

Shares of TSLA ended trading on Friday down 13.69% for the week after dropping nearly 11% on Thursday.

Polestar announces workforce reduction

Polestar Automotive Holding (NASDAQ:PSNY), the emerging Swedish electric automaker, announced on Friday its plans to cut 15% of its global workforce, approximately 150 jobs. The company cited “challenging market conditions” as the primary reason for this decision.

Like many other car manufacturers, Polestar has faced obstacles in the electric vehicle market, including weak demand, significant price reductions, reduced subsidies, and supply chain challenges.

In November, the company adjusted its delivery projections and unveiled a modified business strategy aimed at achieving cash flow breakeven by 2025 and reducing dependence on external funding from major stakeholders like Volvo (OTC:VLVLY) and Geely.

“As part of this business plan, we need to adjust the size of our business and operations. This involves reducing external spending and, regrettably, also our number of employees,” stated a Polestar spokesperson.

Shares of PSNY ended trading Friday up 3.16% for the week after reaching a high of $2.28/sh Friday morning.

© Reuters

Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.

InvestingPro subscribers always get first dibs on market-moving AI analsyt comments.

Microsoft seen as a ‘clear-cut winner in AI’

Microsoft Corporation (NASDAQ:MSFT) held a developer AI tour event in New York City last week and analysts were once again impressed by the company’s advance on the AI front.

For Barclays, the event was another piece of evidence that “Microsoft is a clear-cut winner in AI and has lots of runway to further monetize new and existing products.”

“[We] came away incrementally positive on the progress Microsoft is making in its AI offerings… While today’s event did not feature any new announcements, the strong developer turnout (>3,000 attendees), as well as interest in a variety of Microsoft products (both Copilot and others) demonstrated to us that Microsoft is capturing incremental mind share amongst enterprise customers,” Barclays analysts said.

Can AI rally continue to drive the overall market higher?

Wolfe Research strategists weighed in on the most powerful stocks theme at the moment – AI. Their analysis shows that six prominent large-cap companies, poised to reap significant benefits from AI advancements, have collectively contributed +210 basis points (bps) to the S&P 500‘s year-to-date return of +268 bps.

Within the industry landscape, Semiconductors have stood out as the top-performing group. Companies positioned as major beneficiaries of AI advancements within this sector are anticipated to experience substantial additional advantages in the coming months.

“While expectations appear to be very high, our sense is that the biggest AI beneficiaries are likely to outperform until AI-related earnings expectations start to turn downward. In our view, this is unlikely to occur unless a broad-based recession starts to hit at some point in the months ahead,” strategists said in a note.

“That said, the bigger question is whether the “AI frenzy” can keep powering the overall market higher. While AI should remain a tailwind, our sense is that the overall Fed liquidity picture, the interest rate outlook, and how much the U.S. economy slows in the months ahead will be bigger drivers of overall market returns.”

Citi’s CIO survey

Citi’s 4Q Chief Information Officer (CIO) survey results indicated a significant improvement in the IT budget landscape. Expectations for near-term IT budget growth have increased from +1.9% in the September ’23 survey to +2.8% in the December quarter, approaching the historical average of 3%.

Cybersecurity retains its position as the top investment priority for CIOs, followed by Data modernization/GenAI, Digital Transformation Projects, and Cloud Adoption. The global economic outlook appears stable to slightly improving, with upward revisions noted in trailing 3-month IT budgets. Sector-specific takeaways cover Software, European Technology, Hardware, Communication Services and Infrastructure, and IT Service.

“MSFT remains the top vendor that CIOs are considering as a GenAI partner, far ahead of GOOGL and AMZN. In terms of the breakdown of funding for GenAI projects, 64% of CIOs expect to get new/additional funding while 36% believe it will come from existing resources, with some CIOs expecting to spend less on vendors such as ORCL, IBM (NYSE:IBM) or SAP to make room for GenAI investments,” analysts wrote in a note.

Samsung offers a ‘very cheap’ way to participate in edge AI

Analysts at Morgan Stanley urged the broker’s clients to consider owning Samsung Electronics Co Ltd (KS:005930) shares, as the company offers “one of the best ways” to play a shift to consumer AI.

The analysts argued that AI is “going to be a growth driver for years to come.”

“We estimate double the DRAM content in AI PCs and a >50% rise in the next iteration of AI phones; along with replacement demand, this could drive 6ppt lower DRAM self-sufficiency by 2025,” wrote Morgan Stanley analysts in the note.

“The turn of the memory cycles provides a big boost to earnings estimates,” added the analysts. “Ultimately, Samsung is a very cheap way to participate in edge AI.”

AMD raised to Buy

New Street Research analysts raised their rating on the shares of Advanced Micro Devices Inc (NASDAQ:AMD) to Buy with a $215 per share price target.

The broker’s analysis shows upside for all names in the data center AI chip sector, with AMD and TSMC standing out at each end of the risk spectrum.

“Lisa Su, CEO of AMD, pitched late last year a target addressable market for datacenter AI chips of $400bn. Lisa is to be taken seriously; this forecast might eventually prove wrong, but it was certainly not pulled out of a hat,” the analysts said.

© Reuters

Investing.com — It’s set to be an action-packed week in markets with the Federal Reserve’s first meeting of the year, a flurry of big tech earnings and the latest U.S. jobs report. The Bank of England also holds its first policy meeting of 2024 while data out of China is expected to remain gloomy. Here’s what you need to know to start your week.

Fed ahead

The Fed is widely expected to keep interest rates unchanged on Wednesday with investors eagerly awaiting any indication that officials believe they have progressed enough in their battle against inflation to begin cutting rates sooner rather than later.

Investors have pushed expectations for the Fed’s first rate cut to May from March following recent strong economic data and statements from Fed officials that suggested that cuts may not be as aggressive as expected.

Data on Friday indicated that inflation is moderating but consumer spending remains robust, leading to concerns that price pressures could begin to mount again.

Investors will be closely watching Fed Chair Jerome Powell’s post policy meeting press conference for any insights into how officials have been interpreting recent economic data.

Jobs report

Hard on the heels of the Fed decision the U.S. is to release the January jobs report on Friday, with the economy expected to have added 177,000 new jobs, slowing from 216,000 the prior month.

The recent stock market rally which has powered the S&P 500 to record highs has been driven by expectations of a U.S. economic “soft-landing” in which growth remains stable while inflation cools.

A weaker than expected reading could indicate that the 525 basis points of rate increases delivered by the Fed since 2022 are finally starting to bite, while stronger-than-expected hiring could bolster the case for the central bank to keep rates higher for longer.

The economic calendar also includes data on JOLTS job openings and consumer confidence on Tuesday, followed a day later by a report on private sector payrolls and weekly data on initial jobless claims on Thursday.

Megacap earnings

Earnings will be a major focal point in the week ahead with five of the massive “Magnificent Seven” growth and technology stocks that have powered markets higher for much of the last year reporting.

Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) are due to report results on Tuesday, followed by Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) on Thursday with Meta Platforms (NASDAQ:META) closing out the week on Friday.

With the S&P 500 officially in a bull market, the Magnificent Seven’s results will be crucial in determining whether the index can maintain its momentum.

Collectively, the market capitalization of Alphabet, Microsoft, Apple, Amazon and Meta account for nearly 25% of the S&P 500, giving them an outsize influence on the performance of the broader index.

“There’s not this monolithic performance among those stocks anymore,” said Liz Ann Sonders, chief investment strategist at Charles Schwab told Reuters. “If there is a downside to earnings … that could take the bloom off the rose” for the market as a whole.

Bank of England

The BoE is expected to keep interest rates on hold on Thursday and while it may drop its long-held warning that it will hike rates again if inflation rebounds it is expected to indicate that rates need to remain restrictive for an extended period.

The latest U.K. jobs report showed that wage growth rose at the slowest pace in almost a year in the three months to November, but inflation unexpectedly rose to 4% in December.

Britain’s economy started 2024 on a stronger footing but data last week indicated that supply disruptions in the Red Sea are reigniting inflation in the manufacturing sector.

The BoE raised interest rates 14 times between December 2021 and August 2023, taking rates to a peak of 5.25% after inflation surged to a 41-year high of 11.1% in late 2022.

China PMIs

China is to release official purchasing managers’ index (PMI) data on Wednesday that is likely to show that the world’s second largest economy remains on a shaky footing.

China’s economy expanded by 5.2% in 2023, but its post-pandemic recovery has been shaky, with a protracted housing downturn, mounting deflationary risks and slowing global growth casting clouds over the outlook for this year.

China’s central bank announced last Wednesday that it was making a 50-basis point cut to bank reserves, the biggest in two years, sending a strong signal of support for a fragile economy and the country’s plunging stock markets.

Still, analysts say more stimulus is needed this year to get economic activity on more solid footing.

–Reuters contributed to this report